Supply chain flexibility and decentralisation are crucial for retail resilience

More than two thirds of supply chain professionals will prioritise supply chain resilience and flexibility when building for the future, according to the findings of the 2020 SCALA Supply Chain Debate.

On the 25th June, more than 150 supply chain professionals from across the grocery and home appliance sectors joined the debate to discuss the major changes affecting supply chains as a consequence of the coronavirus pandemic, around the theme; ‘Covid-19: What is the future for supply chains?’. 

Much of the debate focused on the need for businesses’ supply chain strategies to move towards a more flexible model, focused around greater transparency. Indeed, the need for supply chains to focus more on resilience and flexibility was cited as a key strategic priority for the future by 68% of those who attended the debate. 

Supply chain thought leader John Gattorna highlighted the need for supply chain leaders to look at the requirements from outside their organisation, including reviewing their supplier bases and moving from a “one size fits all” model in favour of a more flexible approach that takes into account the needs of different customer groups across multiple channels. 

Paul Buxton and Ryan Gains, both of Morrisons, discussed the role Morrisons’ supplier network had played in its initial response to Covid-19 disruption, and championed the need for greater collaboration and communication with suppliers moving forwards. Another topic of discussion was the growing need for businesses to work both with their supplier network and other external organisations, to build greater resilience into supply chains.

Sustainability was also a recurrent theme. Phil Wood, associate director of strategic programmes at Mondelēz International, discussed the importance of an ongoing approach to increase sustainability, in areas such as making use of more sustainable packaging and reducing the risk of food waste. This sentiment was also echoed by Chris Wood, global programme director at Dyson, as well as the wider audience; 65% of whom revealed that they were already making conscious efforts to improve their carbon footprint. 

Chris Wood also noted consumers’ buying behaviour as a notable area of change in the months following COVID-19. 31% of delegates intend to prioritise buying goods online and minimise physical shopping for the foreseeable future, and the same proportion claimed that they would shop more online due to how COVID-19 has impacted physical retail. 

Interestingly, this increased appetite for eCommerce post COVID-19 was not matched by a greater expectation for delivery fulfilment, with 71% of delegates believing that, provided customers are provided with regular status updates, they will accept longer delivery times. 

The increased importance of decentralisation was discussed by Gavin Chappell, group supply chain director at Holland & Barrett, with over two thirds (67%) of delegates expressing their belief that supply chains will move towards decentralisation over the next five years. Despite many businesses having used centralisation in the past to drive cost savings, the experiences highlighted by COVID-19 mean that companies should consider combining the efficiency of centralised models with the benefits and flexibilities of decentralisation.  

Automation, robotics and AI were identified by delegates as a key growth area in future, with 30% of respondents believing that it is this area that have the most noticeable impact on supply chain operations moving forwards. This was the most commonly-cited area of growth by attendees, above logistics infrastructure, environmental change and supplier management, collaboration and diversity. 

John Perry, managing director at SCALA, said: “COVID-19 has had a tremendous impact on both the supply chain industry and those we partner with. If there is one thing this year’s debate has made abundantly clear, it is that the fallout will be felt for months, and more strategically years, to come, and the industry must in turn adapt to the “new normal”,  whatever that might be.

“Resilience and flexibility will be key to future growth, allowing supply chains to better react to changing consumer preferences, as well as both routine and major disruption in future. By coming together as an industry, we have met many of the challenges raised by COVID-19, and it is essential we learn from this and adapt our future supply chain strategies accordingly.” 

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